WASHINGTON (MarketWatch) — The federal government’s budget gap narrowed in August, the Treasury Department reported Thursday, shrinking 13% from the same month a year ago as receipts rose and spending fell.

The government’s shortfall was $129 billion in August, compared to the $148 billion deficit posted in August of last year. The deficit narrowed due to higher receipts of both individual and corporate taxes, as well as lower spending on budget items including defense and transportation.

Total receipts increased 5% over their August 2013 level, to $194 billion. Spending fell 3%, to $323 billion.

The latest monthly figure is helping to power a big decline in the deficit for the fiscal year to date. Including the August shortfall, the deficit for the first 11 months of fiscal 2014 is $589 billion, which is 22% lower than the year-ago period. The year-to-date figure is the lowest since the same period in 2008.

The government’s budget year runs from October to September. August is typically a deficit month since there are no major tax due dates.

Adjusting for the timing of some payments in August of this year and last year, the monthly budget gap would have been $109 billion, a Treasury official said.

For the full fiscal year, both the Obama administration and the Congressional Budget Office are predicting the lowest shortfall since 2008, when the deficit was $458 billion. Last year, the deficit was $680 billion, the first shortfall below $1 trillion of Barack Obama’s presidency. The deficit hit a record $1.4 trillion in 2009, but has been narrowing as the economy improves.

Much of the year-to-date improvement comes from receipts: Total receipts are up 8% through the end of August, to $2.7 trillion. Spending, meanwhile, has risen just 1% this fiscal year, to $3.2 trillion.

Receipts are higher for the year to date in most budget categories, including individuals’ withheld and payroll taxes, corporate taxes and Federal Reserve earnings. Spending is up slightly overall for the year, but some areas including defense and agriculture have fallen. Defense spending has dropped 5% so far this fiscal year.

The latest budget figures arrive as lawmakers are considering a bill to keep the government open past Sept. 30, and prepare for the midterm elections in November. Without an agreement to fund the government, there would be another partial shutdown like the one that lasted for more than two weeks last fall.

The House of Representatives was due to vote Thursday on a measure to fund the government, but action was postponed until next week to allow members time to consider a White House request to assist Syrian rebels. House Majority Leader Kevin McCarthy announced the delay Thursday afternoon.

Falling deficits have taken big fiscal deals off the front burner as a political issue. But the CBO has warned that shortfalls will begin to rise again after 2015, and approach $1 trillion within 10 years if current laws aren’t changed.

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